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eCommerce - Saturday, June 9, 2007

NexTag Enjoys $1.2B Valuation In Buyout

San Mateo-based Nextag has sold two-thirds of its equity to private equity firm Providence Equity Partners for $830M, valuing the company at $1.2B. Prior investors Morgenthaler Ventures and management will continue to own stakes. Its seems a market fair valuation for a company that likely did more than $200M in revenues last year and has been profitable for ages. The company was founded back in 1999 so there surely was some motivation to gain liquidity after all these years.

Nextag Founder/CEO Purnendu Ojha

NexTag is one of the largest comparison shopping business on the Web. NexTag makes a good living both through advertising and by charging retailers for directing leads to their site. The company grew substantially through the sale of leads of items like mortgages and student loans.

Despite its impressive revenues, NextTag was apparently not viewed as a buyout candidate of strategic importance - as online ad companies have been viewed of late. Apparently, Nextag also was not feeling the love from Wall Street to take the company public. Providence Equity and Nextag ownership clearly believe that they can replay the huge, quick profit that Hellman & Friedman made from the planned $3.1B pending sale of DoubleClick to Google (NASDAQ: GOOG).

Most of NextTag's competitors have already been bought, which we would think we up its valuation. These include: MySimon, PriceGrabber, Shopping.com and Shopzilla.

Comparison Engines and Gigagom teamed on this nice graph. Many of these deals are very old, but it illustrated how consistently valuable comparison shopping has been.

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